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Assistant Attorney General Lanny A. Breuer of the Criminal Division Speaks at the International Anti-Counterfeiting Coalition Spring Conference

SF, CA

United States

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Thursday, May 12, 2011

Thank you, Bob, for that generous introduction. I’m absolutely delighted to be here today, and to join you all for this important conference. I was told before coming out here that if there was one intellectual property event to attend all year, this was it, so I am truly honored by your invitation, and to be taking part in your Spring Conference.

Over the past two years, I have had the privilege of leading the Criminal Division’s nearly 600 lawyers in enforcing the nation’s criminal laws. Our prosecutors bring cases in areas ranging from Medicare fraud and money laundering to international narcotics trafficking, gang violence, and public corruption. And, of course, we vigorously prosecute intellectual property crime.

Unlike some of our other priority enforcement areas – drug cartel violence along the Southwest/Mexico border, for example – it is not always obvious to people why we devote as many resources as we do to fighting IP crime. In part, I think that’s because of a misperception that IP crimes are victimless, or that the victims of IP crime don’t really suffer. Everyone in this room, of course, knows that isn’t true. We know that counterfeit pharmaceuticals and other consumer products can cause serious harm to people; and companies whose trade secrets are stolen or whose goods are counterfeited may be forced to downsize or go out of business, costing individuals their jobs. Still, stealing a trade secret feels more abstract to most people than stealing a car. And IP crime is becoming the province of sophisticated, international organized crime groups that are drawn to it because of its perceived low risk and high reward.

These are real challenges for law enforcement. But we are absolutely committed to fighting back, with your help. We are motivated to punish and deter IP crime, and to seek stiff penalties for those we catch. In addition, vigorous IP enforcement helps to promote innovation at home and secure the competitive advantage of the United States in the global economy. As President Obama said last year, we will “aggressively protect our intellectual property” because “[o]ur single greatest asset is the innovation and the ingenuity and creativity of the American people.”

Indeed, I don’t think it’s an exaggeration to say that this Administration has made intellectual property enforcement a higher priority than any other Administration in recent memory.

In 2009, President Obama appointed the first U.S. Intellectual Property Enforcement Coordinator, or IPEC, Victoria Espinel. We work closely with Ms. Espinel’s office on a range of issues, including, perhaps most significantly, the implementation of the Joint Strategic Plan on Intellectual Property Enforcement, which her office released last June. Among other things, we have worked on a series of legislative recommendations aimed at improving IP enforcement government-wide. These recommendations, which were unveiled in March, include proposals for enhanced criminal penalties for economic espionage and trade secret theft, drug counterfeiting offenses, and other IP crimes. It also recommends creating a felony offense for streaming copyrighted works, and giving law enforcement the authority to seek wiretaps in criminal copyright and trademark cases.

Under Attorney General Holder’s leadership, intellectual property enforcement has become a top priority of the Justice Department. In 1999, then-Deputy Attorney General Eric Holder announced the Department’s first intellectual property initiative. And in February of last year, as Attorney General, he announced the formation of a new Justice Department Task Force on Intellectual Property, whose mission is to coordinate the Department’s overall response to the growing threat of intellectual property crime.

The Department-wide response is multi-faceted. It includes enforcement by the Civil Division, which assists in recovering penalties imposed upon importers of counterfeit goods, and enforces the criminal provisions of the Food, Drug, and Cosmetic Act that govern counterfeit drugs and medical devices. It also includes efforts by the Justice Department’s Office of Justice Programs, which awards grants to state, local, and tribal law enforcement partners to help improve their capacity to address IP crime. As part of its Fiscal Year 2010 Intellectual Property Enforcement Program, Justice Programs awarded approximately $4 million in such grants.

And, of course, the Department’s response includes vigorous criminal enforcement. Together with the nation’s 94 U.S. Attorneys’ Offices, the Criminal Division’s Computer Crime and Intellectual Property Section, or CCIPS, is at the forefront of combating IP crime nationwide.

CCIPS has over 40 highly-specialized prosecutors and computer forensics experts who prosecute multi-district and international cases, and work closely with a network of over 240 specially trained Computer Hacking & Intellectual Property, or CHIP, prosecutors located in U.S. Attorneys’ Offices throughout the country.

Together, CCIPS and CHIP prosecutors vigorously investigate and prosecute IP crimes. Already in 2011, we have prosecuted significant cases in each of our key enforcement areas. In March, for example, in the area of trade secret theft, the U.S. Attorney’s Office for the Southern District of New York secured a 97-month sentence for a former computer programmer at the investment bank Goldman Sachs for stealing valuable, proprietary computer code belonging to the bank. During the sentencing proceeding, the district judge remarked that the defendant’s conduct was “audacious – motivated solely by greed, and...characterized by supreme disloyalty to his employer.” In addition, last month, Mike Yu, a Chinese national and former Ford Motor Company engineer, was sentenced to 70 months in prison for stealing sensitive automotive design documents from Ford in a case prosecuted by the U.S. Attorney’s Office in the Eastern District of Michigan.

In the area of health and safety, we have also been aggressive. In February, for example, in a case by the U.S. Attorney’s Office in the Eastern District of Missouri, defendant Mark Hughes was sentenced to 46 months in prison for illegally importing from China and India, and then selling in the United States, counterfeit Viagra® and Cialis® pills. We have also continued to build on “Operation Network Raider,” an international law enforcement initiative that targets the illegal distribution of counterfeit network hardware manufactured in China. When we announced the operation last year, it had already resulted in 30 felony convictions and more than 700 seizures of counterfeit Cisco network hardware and labels with an estimated retail value of more than $143 million. Indeed, as we speak, CCIPS and the U.S. Attorney’s Office in the Eastern District of Virginia are trying a woman and her former husband for trafficking in counterfeit Cisco goods and labels manufactured in China. The government is also seeking forfeiture of over $1.4 million in this case.

In the area of piracy and counterfeiting, we have been equally innovative in our enforcement efforts. On the Monday after Thanksgiving last year – so-called “Cyber Monday”– the Attorney General announced a coordinated law enforcement effort known as “Operation in Our Sights II,” through which the Criminal Division, the Department of Homeland Security, and nine U.S. Attorneys’ Offices executed seizure orders against 82 domain names of websites engaged in the sale and distribution of counterfeit goods and illegally copyrighted works. And just two weeks ago, defendant Richard Montejano pleaded guilty for leading a so-called “warez” group called Old School Classics, which specialized in the unauthorized reproduction and distribution of copyrighted music over the Internet from 2002 to 2007.

Of course, the problem of IP crime is not confined to our borders. We are acutely aware that it is an international problem as well. We live in a world where new technologies offer almost limitless opportunities for businesses – both large and small – to market and distribute their goods and digital content to consumers around the world. Unfortunately, these same technologies are exploited by individuals and organized criminal enterprises to create high-quality knock-offs and perfect digital copies for global distribution. Trademark counterfeiters often choose to make their illegal goods abroad and then smuggle them for sale into the United States rather than manufacture them here. And websites that offer pirated copies of new or even pre-release movies, music, software, or games often operate overseas. The reason is simple: not every country takes IP enforcement as seriously as we do, or has the expertise to prosecute IP cases effectively.

With that in mind, we are working consistently with our foreign law enforcement allies to reduce the global supply of pirated and counterfeit goods, and to strengthen IP enforcement capacity abroad. We do this in several ways. First, through high-visibility outreach: Last October, the Attorney General traveled to China, where he met with senior law enforcement officials, including the Minister of Public Security, to stress the importance of IP enforcement and bilateral cooperation in this area between the United States and China. On the same trip, the Attorney General also spoke at the Fourth Annual International Law Enforcement IP Crime Conference in Hong Kong, where he delivered the message to more than 500 law enforcement and industry representatives from over 40 countries that “[p]rotecting intellectual property is a top priority for the United States.”

We are also partnering with the State Department to build strong relationships with our law enforcement partners and to provide training to officials from over 20 countries in Asia, Eastern Europe, South and Central America, Africa, and the Middle East, so that they can develop their own IP enforcement capacity. Indeed, over the past five years, Justice Department attorneys have provided training and education on intellectual property enforcement to more than 10,000 prosecutors, investigators, judicial officers, and other officials from around the world. Strengthening the enforcement capacity of other nations not only helps them; it also most definitely assists American enforcement efforts.

A cornerstone of our international outreach work is the Department’s Intellectual Property Law Enforcement Coordinator, or IPLEC, program. Through the IPLEC program, we send experienced federal prosecutors overseas to take the lead on our IP protection efforts in key spots around the globe. These prosecutors work closely with law enforcement authorities abroad to share information and evidence regarding joint investigations and to enhance IP enforcement training programs. We currently have one IPLEC stationed in Bangkok, Thailand, who manages our IP protection efforts in Southeast Asia, and until recently we had a second IPLEC stationed in Sofia, Bulgaria, who was managing our efforts in Eastern Europe.

These prosecutors are critical to our international outreach and enforcement efforts. So much so, in fact, that President Obama has asked Congress, in his 2012 budget request, to fund a new Department program that would place six International Computer Hacking and Intellectual Property coordinators, or “ICHIPs,” in key locations around the world, to build upon the success of the IPLEC program.

As this Administration’s, and this Justice Department’s, actions make clear, we are serious about IP enforcement. As the head of the Criminal Division, I am personally committed to vigorously enforcing our criminal IP statutes, and bringing trade secret thieves, counterfeiters, intellectual property pirates, and others to justice. But the world of IP crime is vast, and we cannot work alone. What can you, the industry leaders whose intellectual property is at risk, do to help?

The first thing you can do is to continue educating the public about the scourge of IP crime. The perception that IP crime is a “soft” crime has a counterproductive effect on our efforts, and we need you to help us educate people about the real consequences of these offenses.

Second, we urge you to develop strong internal mechanisms for detecting IP crime with respect to your products and services. We cannot police the entire global economy, and so we absolutely count on you to detect IP crime as it happens. Our partnership with all of you must be strong if we are to make real progress.

Finally, let us know what you find. Just as you would report a burglary in your home, we need you to report the theft of your intellectual property. When we learn, in real-time, of IP crime, we can act more effectively and aggressively than if we learn about it long after the fact.

IP crime is a serious threat. It jeopardizes the health and safety of consumers. It stifles creativity. And it has a negative effect on the American economy. Attorney General Holder and I and other leaders in the Justice Department are 100 percent committed to aggressive IP enforcement. And we want and need you to work with us in this fight. We face real challenges in this area. But we have taken significant strides in the last two years, and I look forward to expanding on those efforts in the months and years ahead. Thank you.